Adoption and publication of the Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) in the Official Journal of the European Union
Closing more than two and a half years’ European inter-institutional proceedings, the European Parliament adopted in second reading the Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (the “EU Regulation 2015/848”). The Regulation (EU) 2015/848 was then published in the Official Journal of the European Union on 5 June 2015 and has entered into force since 25 June 2015. However, Denmark has not taken part in the adoption of the EU Regulation 2015/848 and is not bound by it or subject to its application.
Furthermore, the provisions of the EU Regulation 2015/848 will apply only to insolvency proceedings opened after 26 June 2017. The EU Regulation 2015/848 repeals the Council regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (the “EC Regulation 1346/2000”) which will continue to apply to insolvency proceedings which fall within the scope of that Regulation and will have been opened before 26 June 2017.
Through the EU Regulation 2015/848, the European legislators aim at correcting the drawbacks of the EC Regulation 1346/2000, making cross-border insolvency proceedings more efficient and effective, rescuing economically viable but distressed businesses and subsequently the related employment and protecting local creditors’ rights.
Main features of the EU Regulation 2015/848 consist of:
- an extension of the scope of this Regulation which now applies to final or interim, public and collective proceedings where there may only have a likelihood of insolvency, and/or with the debtor’s partial or full divestment of its assets and/or proceedings covering a debt discharge or a debt adjustment of consumers and self-employed persons;
- clarification of the center of main interests (the “COMI”) to avoid forum shopping (or the election by the plaintiff of the most favorable jurisdiction) and provide useful guidance (including rebuttable presumptions in order to locate the COMI) to all interested parties and increase legal security;
- before the opening of insolvency proceedings, the competent court’s duty to analyze its jurisdiction on the basis of the EU Regulation 2015/848 provisions;
- an application of the law of the European Union Member State within the territory of which such proceedings are opened to insolvency proceedings and their effects;
- the creation of what some have already termed “secondary virtual proceedings” enabling the insolvency practitioner in main insolvency proceedings to give an undertaking to local creditors that they will be treated as if secondary insolvency proceedings had been opened in order to avoid the opening of secondary insolvency proceedings;
- provisions organizing and governing horizontal and vertical cooperation and communication between the main actors of the main and/or secondary proceedings (debtors, insolvency practitioners and courts) within the territory of the European Union;
- a set of procedural rules governing the cooperation and communication between the main actors involved in insolvency proceedings relating to different companies belonging to the same group of companies and having a goal of efficiency; and
- the implementation by European Union Member States of national insolvency and publicly accessible electronic registers to publish information concerning insolvency proceedings as from 26 June 2018 and the interconnection of such insolvency registers via the European e-Justice Portal in compliance with the European legislation on data protection as from 26 June 2019.
The EU Regulation 2015/848 will be applicable as from 26 June 2017 with the exception of several provisions which will apply from 26 June 2016, 26 June 2018 or 26 June 2019.
In short, the EU Regulation 2015/848 contains significant and substantial changes compared to the provisions of the EC Regulation 1346/2000 and in certain respects is “revolutionary”. Its application will imply effective multilingualism, cooperation and communication between the actors involved in insolvency proceedings opened within the territory of the European Union. For these reasons, it will be a major European challenge ahead for a full range of stakeholders (debtors, insolvency practitioners, judges and lawyers).
For any further information, please feel free to contact Romain Viard, Senior Associate, Attorney-at-law admitted to the Paris Bar and to the Luxembourg Bar under his home-country professional title (liste IV)